ETFs set for more non-traditional product development

Investor demand is pushing exchange-traded fund (ETFs) development towards socially responsible investment, smart beta and multi-assets, researchers say.

Demand for non-traditional, market-cap products like these has increased over the past year.

Out of 180 responses to a survey – carried out by Brown Brothers Harriman, a custody bank, and Inside ETFs, a research house – 52% said they considered environmental, social and governance factors when making new investments.

And though just over three-quarters of respondents had less than 5% of their portfolio in smart beta, 49% viewed smart beta as an alternative to active strategies.

Some of the surveys other findings were:

  • 68% of respondents will invest in an ETF with a track record of less than one year.
  • One-third of respondents required at least €50 million in assets under before considering a new ETF.
  • 54% of respondents – which included 102 independent financial advisers – viewed the rise of robo-advisors as an opportunity for their businesses.
  • “Only” 27% of survey respondents wanted to see more fixed income ETFs, which the researchers said could be a reflection of the compression in bond yields, as fixed income received strong flows last year and so far this year.

“This year’s survey confirms that the demand for new ideas in the ETF space is accelerating,” said Matt Hougan, chief executive officer of Inside ETFs. “Investors are looking ahead to a market characterised by the potential for both higher volatility and lower returns, and they are demanding more out of ETF product development to solve those challenges.”

As well as the 102 independent financial advisers, the ‘2016 European Investor Survey’ received responses from 37 banking and insurance professionals, 32 mutual fund managers, and nine hedge fund managers, all with combined assets of over €3.8 trillion.

©2016 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

Innovative US companies are providing some of the solutions to the climate crisis and transition to a more sustainable economy. We see potential opportunities in areas including renewable energy and…
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

IRELAND SPOTLIGHT

Visit our dedicated Ireland channel for all the latest news and analysis on the country's investment industry.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST